Expert seeks removal of impediments to pension operation

As the pension industry gains ascendancy, it is important to plug all the holes that make unfettered rendition of pension administration tedious or even impracticable.

A communication, development and management specialist, Mr. Paddy Ezeala, gave the indication while speaking on ‘Pension reform and the tardiness of accrued rights’.

“It is important to point out these impediments and address them conclusively in order to forestall a reversal of the gains of the industry,” he said.

Apart from the threat of some failed legislative manipulations to accommodate some interests and the large-scale ignorance of the workings of the Contributory Pension Scheme even in high places, he said another sore point was the lateness in the payment of accrued rights to retiring or retired workers.

While accrued rights are largely entitlement of workers before the advent of the private sector-driven CPS, he said its late payment by especially, the various tiers of government could render pension administration cumbersome or even make it impossible.

According to him, this is because accrued rights have to be lumped into Retirement Savings Accounts before lump sum and programmed withdrawals could be worked out for retirees.

Most, if not all retirees from government establishments had their entitlements handled by either the Defined Benefits Scheme or the CPS, he observed.

He said, “It is worth noting that lack of prompt payment of entitlements by government is adversely affecting the smooth running of the new Contributory Pension Scheme. Those who do not understand these intricacies would conclude that the new pension scheme is not as rosy as being touted.”

For a proper understanding of the quagmire in which Pension Fund Administrators somehow found themselves, he explained that more light should be shed on accrued rights or benefits.

He said, “Accrued right is a total amount of a pension plan as on a specified date. They are usually in agreement with the terms of the pension plan and are based on the participant’s salary package and length of service.”

According to him, it is a term used to describe what the government owes its workers who have been in service before the commencement of the Pension Reform Act, 2004 (reviewed in 2014).

He explained that it was recognised as an amount acknowledged through the issuance of Federal Government retirement benefits bonds.

When the government employee retires, according to him, the bonds are liquidated and added to the retiree’s balance in the RSA managed by a PFA.

“It is the addition of these two that makes up the retiree’s entitlement,” he said.

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